RIM gets thrifty as it looks ahead to BlackBerry 10 launch

As Research in Motion prepares for a big quarter with the January launch of BlackBerry 10, it’s trying to squeeze as much money as possible out of its operation, which it plans to use to help get its new platform off the ground. That was the big theme on RIM’s third quarter earnings call Thursday, in which it posted revenue of $2.7 billion with an adjusted net loss of $114 million or $0.22 cents per share, beating analyst expectations of $2.66 billion in revenue with adjusted loss per share of $0.36.

The results are down from the same period a year earlier when RIM reported revenue of $5.2 billion with adjusted income of $667 million or $1.27 per share diluted. The company shipped 6.9 million BlackBerry smartphones and 255,000 Playbook tablets in the latest quarter, also a steep drop off from the last year when RIM shipped 14.1 million smartphones and 150,000 BlackBerry Playbook tablets.

But the bright spot that RIM kept coming back to was the fact that it was able to boost its cash on hand to $2.9 billion, up from $2.3 billion for the previous quarter. That came from a mix of favorable working cash flow, better efficiencies and tax benefits in the quarter. This stockpile of cash is essential for RIM, which will need to turn it into working capital and use it for a big marketing spend for BlackBerry 10.

While it prepares for a big battle, RIM is remaining thrifty with its money and believes it’s gotten better at managing its costs, hoping that will help power it through its comeback to profitability. A key sign of that was RIM’s restructuring plan, which was supposed to net $1 billion in savings by the end of the fiscal year. But CEO Thorsten Heins said Thursday that RIM had already achieved the savings one quarter early. He said the total cost of the restructuring will cost $250 million compared to $350 million originally announced.

Even as RIM ratchets up its spending in the coming quarters, it still expects its cash on hand to remain well above $2.1 billion, which it started the year with. It’s all part of righting the ship and instilling a new culture at RIM, said Heins.

“We believe that the company has stabilized and will turn the corner in the next year,” he said.

But challenges are mounting for RIM. It saw its first decline in its subscriber base, which slipped to 79 million, down from 80 million in the previous quarter. The biggest reason for the drop off was losses in the U.S., which doesn’t bode well for the future. RIM also said Canada and the U.K. made up a smaller percentage of sales in the latest quarter. That’s a concern because these markets are where RIM can expect to sell the most BlackBerry 10 devices.

RIM is also facing more uncertainty with its service revenue fees as it moves to offer enterprise customers different service packages. Some may actually spend less because they don’t need as many BlackBerry enterprise services. Some may elect to spend more, trusting RIM to manage not just BlackBerrys but all of their devices. That will be a key area to watch to see if RIM can be successful going forward. And a lot will depend on whether BlackBerry 10 gets traction, both with consumer and enterprise customers.

That, in the end, is the biggest question: how well RIM’s new phones will be received. If it can’t move those, even with good backing from carriers, it’s pretty much game over.